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| Nationwide protects some savers from Bank of England's rate cut | Nationwide protects some savers from Bank of England's rate cut |
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| Nationwide Building Society is offering solace to savers by protecting some customers from the Bank of England’s interest rate cut, but admitted its profits could fall in the months ahead. | |
| Joe Garner, the chief executive of the UK’s biggest building society, said the decision to hold deposit rates would only help those with regular savings products, who make up a small proportion of its overall customer base. | |
| He said, however: “We don’t want a generation coming through thinking there is no point saving.” | |
| Garner said customers who do not use its regular savings products will take a cut, but not any more than the quarter point imposed by the Bank. Letters to customers state that it will not, at this point, cut rates below 0.1%. | |
| “It is too early to say exactly what will happen in future, but the society has said that it has no plans to introduce negative interest rates for either personal or commercial customers,” Nationwide said. | |
| The Bank’s decision to cut rates by a quarter of a point to 0.25% came with a warning from its governor, Mark Carney, that lenders had no excuse not pass the reduction on to borrowers, but it has sparked concern for savers. | The Bank’s decision to cut rates by a quarter of a point to 0.25% came with a warning from its governor, Mark Carney, that lenders had no excuse not pass the reduction on to borrowers, but it has sparked concern for savers. |
| Nationwide’s announcement, which came as it revealed a 6% rise in first-quarter profits to £401m, means that Lloyds Banking Group is the last major lender yet to say how it will respond to Carney. | |
| Lloyds, which is 9% owned by the taxpayer, is the largest mortgage lender in the UK and also the biggest savings institution. | |
| Nationwide announced that its mortgage rates would fall in line with the 0.25% reduction shortly after the Bank moved rates for the first time in seven years on 4 August. About £40bn of its £120bn mortgage book is for customers who are on a base mortgage rate, pegged at 2% above the Bank’s rate. | Nationwide announced that its mortgage rates would fall in line with the 0.25% reduction shortly after the Bank moved rates for the first time in seven years on 4 August. About £40bn of its £120bn mortgage book is for customers who are on a base mortgage rate, pegged at 2% above the Bank’s rate. |
| With regard to savers, it said: “It is too early to say exactly what will happen in future, but the society has said that it has no plans to introduce negative interest rates for either personal or commercial customers.” | |
| Nationwide was an active mortgage lender in the three months to the end of June, taking a 52.8% share of new loans. The Swindon-based society said, however, it expected a slowdown in the buy-to-let market, which accounted for 22% of its lending last year, for the rest of 2016. | Nationwide was an active mortgage lender in the three months to the end of June, taking a 52.8% share of new loans. The Swindon-based society said, however, it expected a slowdown in the buy-to-let market, which accounted for 22% of its lending last year, for the rest of 2016. |
| Like many banks and building societies trying to keep a balance between interest paid to savers and the rate that can be charged to borrowers, Nationwide’s margin fell to 1.35% from 1.61%. Mark Rennison, its finance director, said that while this was toward the bottom of its expectations it was higher than the 0.8% margin that the society operated on during the banking crisis. | Like many banks and building societies trying to keep a balance between interest paid to savers and the rate that can be charged to borrowers, Nationwide’s margin fell to 1.35% from 1.61%. Mark Rennison, its finance director, said that while this was toward the bottom of its expectations it was higher than the 0.8% margin that the society operated on during the banking crisis. |
| “The sustained low interest rate environment and competition in core markets will maintain pressure on margins and we anticipate profits are likely to moderate in the period ahead,” the society said. Last year it made profits of £1.3bn. | “The sustained low interest rate environment and competition in core markets will maintain pressure on margins and we anticipate profits are likely to moderate in the period ahead,” the society said. Last year it made profits of £1.3bn. |
| Garner joined Nationwide in the spring when he replaced Graham Beale, who took the helm just before the 2008 banking crisis. Nationwide usually appoints a chief executive from outside its ranks. Garner, who used to work at HSBC, was recruited from BT’s Openreach business. | Garner joined Nationwide in the spring when he replaced Graham Beale, who took the helm just before the 2008 banking crisis. Nationwide usually appoints a chief executive from outside its ranks. Garner, who used to work at HSBC, was recruited from BT’s Openreach business. |